# Ain't this chart pretty? (Gas prices)



## Tilted

Well... the last 2 weeks of it anyway...

http://data.cnbc.com/quotes/%40RB.1/tab/2

That's a chart for August contracts for wholesale gasoline base (specifically, New York Harbor delivery of Reformulated Regular Gasoline Blendstock). Its price movements give us an idea what to expect with regard to pump prices. The correlation is far from perfect, but the trends tend to line up - with pump prices being a bit delayed in time.


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## migtig

Hope it keeps dropping.  It's down a penny today!  Of course, with increased taxes, we aren't going to see the drop at the pump.


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## tommyjo

over the last month the difference from low to high is 12 whole cents...on a standard 16 gallon tank that amounts to $1.92 more per tank...oh the horror!


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## MarieB

tommyjo said:


> over the last month the difference from low to high is 12 whole cents...on a standard 16 gallon tank that amounts to $1.92 more per tank...oh the horror!



Oh what a little snob you are looking down your nose at people for whom this does make a budgetary difference, and of course fuel price changes do not only effect how much we are paying at the pump.


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## Gilligan

tommyjo said:


> over the last month the difference from low to high is 12 whole cents...on a standard 16 gallon tank that amounts to $1.92 more per tank...oh the horror!



WTF is "Standard" about a 16 gallon tank?  My F-450 holds 95 gallons..most of my Broncos hold 33...and so on.   And, you should see the effect that "12 whole cents" has when I fill up my 32' boat, Sugar Tits. No..really..you should. Stop by and I'll show you.


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## Larry Gude

Gilligan said:


> WTF is "Standard" about a 16 gallon tank?  My F-450 holds 95 gallons..most of my Broncos hold 33...and so on.   And, you should see the effect that "12 whole cents" has when I fill up my 32' boat, Sugar Tits. No..really..you should. Stop by and I'll show you.



Elitist scum. I hope you're happy with the Polar Vortex you and your ilk are imposing on the rest of us next week.


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## Gilligan

Larry Gude said:


> Elitist scum.:




I like the sound of that...has a nice ring to it.


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## Larry Gude

Gilligan said:


> I like the sound of that...has a nice ring to it.



If only it would fit on my plates...


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## Gilligan

Larry Gude said:


> If only it would fit on my plates...





rereading my post, I'm now wondering how many people will think that "Sugar Tits" is the name of my boat, and not the term of endearment I affectionately employ as a nickname for TommyJo.


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## Larry Gude

Gilligan said:


> rereading my post, I'm now wondering how many people will think that "Sugar Tits" is the name of my boat, and not the term of endearment I affectionately employ as a nickname for TommyJo.



Speaking of punks, punctation (and punctuality for that matter) matters. A lot. 

Consider; 

"Let's eat, grandma!"

or

"Let's eat grandma!" 



That's why I am scared of learning a foreign language. Enough goes wrong as it is with English.


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## kwillia

Larry Gude said:


> Elitist scum


Saw them in concert once...


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## Tilted

tommyjo said:


> over the last month the difference from low to high is 12 whole cents...on a standard 16 gallon tank that amounts to $1.92 more per tank...oh the horror!



Even if we stick to closing prices (which narrows the range), the high to low difference is closer to 16 cents. That drop was over less than 3 weeks - not an earth shattering or even particularly unusual move, but still welcome relief from the run up that preceded it. And just for giggles, 16 cents per gallon at the gasoline pump would represent about $20 Billion per year for Americans.


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## Larry Gude

kwillia said:


> Saw them in concert once...



Speaking of which...

https://www.facebook.com/GWARbar?rf=277008178994113


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## Hank

Larry Gude said:


> Speaking of which...
> 
> https://www.facebook.com/GWARbar?rf=277008178994113



Oh cool. Will the bar specialize in different types of heroin?


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## Larry Gude

Hank said:


> Oh cool. Will the bar specialize in different types of heroin?



It should, shouldn't it?  The Brokie Croakie???


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## Gilligan

Hank said:


> Oh cool. Will the bar specialize in different types of heroin?



There is more than one kind?  Where have I been?


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## Tilted

So... to toss a bit more good news into the middle of the day... that August RBOB price is down another 4 or 5 cents to $2.88. And WTI Oil is below $100 for the first time since the latest unrest in Iraq hit the headlines. Even Brent is down around $105.


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## Larry Gude

Tilted said:


> So... to toss a bit more good news into the middle of the day... that August RBOB price is down another 4 or 5 cents to $2.88. And WTI Oil is below $100 for the first time since the latest unrest in Iraq hit the headlines. Even Brent is down around $105.



Wake me up when we're where we should be. < $50


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## Tilted

Larry Gude said:


> Wake me up when we're where we should be. < $50



Sleep well Rip.


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## Larry Gude

Tilted said:


> Sleep well Rip.


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## Tilted

RBOB Gasoline has continued to come down, it's now around $2.72. At the pump, and ballpark-ing it, that would represent a savings of something like $50 Billion for Americans over the course of year as compared to where prices were a month or so ago.

WTI Oil is also at a 6-month low, below $98. But don't worry Larry, the soundness of your slumber is still not at all in jeopardy.


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## Tilted

RBOB peeked its head down below $2.40 a few minutes ago, right now it's a little above that. That's the lowest I can recall since early 2011 (though it may have briefly dipped lower since). And WTI Oil is below $90 this morning.

Though the price declines could reverse themselves at any time, I think it's possible that we'll see some pump prices with a 2 handle in coming weeks. We'll have to keep our collective fingers crossed. At any rate, we've gotten some significant relief from where we were a few months ago.


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## SG_Player1974

Tilted said:


> We'll have to keep our collective fingers crossed. At any rate, we've gotten some significant relief from where we were a few months ago.



Ummm... what exactly are you saying here? As far as I know, the price of gasoline at the pump has INCREASED in the last 2-3 weeks to the tune of ~15 to 20 cents per gallon!

What "significant relief" are you referring to? Not trying to be snarky... just wondering where your logic is pointing to :shrug:


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## Tilted

SG_Player1974 said:


> Ummm... what exactly are you saying here? As far as I know, the price of gasoline at the pump has INCREASED in the last 2-3 weeks to the tune of ~15 to 20 cents per gallon!
> 
> What "significant relief" are you referring to? Not trying to be snarky... just wondering where your logic is pointing to :shrug:



As that passage you quoted indicates, the significant relief I referred to was from where gas prices were 3 months ago.

We've seen a major downward move in gas prices over the last few months. During that time the line hasn't been straight down, such things rarely are - there have been smaller moves in both directions within the larger trend. Nationally gas prices have been mostly flat over the last couple of weeks, but there certainly would have been different moves depending on just where you are and the circumstances of the gas stations you're getting your gas from - no doubt some prices have gone up a little as compared to some point a week or two ago. The point is that the larger move has been quite favorable and, unless something changes quickly in the wholesale markets, we can expect further movement downward at the pumps in the coming weeks.


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## Gilligan

Overall, all positive in this summary too.

http://www.marinelink.com/news/production-falling-rising378603.aspx


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## GURPS

Tilted said:


> As that passage you quoted indicates, the significant relief I referred to was from where gas prices were 3 months ago.
> 
> We've seen a major downward move in gas prices over the last few months.




$ 3.12 per gal for 85 @ BJ's Waldorf last friday


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## Gilligan

Bloomberg update on crude pricing...

http://mobile.bloomberg.com/news/2014-10-17/oil-is-cheap-but-not-so-cheap-that-americans-won-t-profit-from-it.html?hootPostID=db141df47df18a491dd96ecd26f2e410


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## SG_Player1974

So..... Instead of $8 Billion in profits, the companies will have to settle for $4 Billion? 

How will they EVER survive? 

Wake me up when the price at the pump for Unleaded is at $1.50/gallon!!


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## SoMDGirl42

SG_Player1974 said:


> Wake me up when the price at the pump for Unleaded is at $1.50/gallon!!



That's a long time in a coma

I paid 2.83 last week with a coupon  Felt like I won the lottery paying less than 3.00


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## Baja28

$2.61 on Rte 3 just before Fredericksburg.


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## Gilligan

SG_Player1974 said:


> So..... Instead of $8 Billion in profits, the companies will have to settle for $4 Billion?
> 
> How will they EVER survive?
> 
> Wake me up when the price at the pump for Unleaded is at $1.50/gallon!!




Perhaps you could explain why you think the gross magnitude of any company's profit means anything?...as compared to profit as a percentage of sales volume, which does.  Are you aware how the crappy profit margins in the refining segment have resulted in the closure or sale to third-tier operators of many a refinery?  The profit margins for refiners suck rocks..and have for quite a while.


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## Grumpy

SG_Player1974 said:


> So..... Instead of $8 Billion in profits, the companies will have to settle for $4 Billion?
> 
> How will they EVER survive?
> 
> Wake me up when the price at the pump for Unleaded is at $1.50/gallon!!



You never struck me as one of the Occupy Wallstreet guys.


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## SG_Player1974

Gilligan said:


> Perhaps you could explain why you think the gross magnitude of any company's profit means anything?...as compared to profit as a percentage of sales volume, which does.  Are you aware how the crappy profit margins in the refining segment have resulted in the closure or sale to third-tier operators of many a refinery?  The profit margins for refiners suck rocks..and have for quite a while.



I would kindly point back to the facts that I stated in a previous thread....

If someone could explain to me why the price of gas at the pump increased a total of $1.20 in 25 years (mid-70's to 2000) yet... it has increased almost twice that amount in half the time. And once again... please don't even try to sell me the "demand has gone up" argument! Even when gas prices started going up to ridiculous prices in the mid-2000s there was excuse after excuse (not enough ships coming in, etc.) My personal favorite was when the price would go up $0.10 to $0.15/gallon because "The hurricane MIGHT cause an offshore refinery to close!" REALLY? MIGHT? and 1 refinery would cause this??

Too many lame excuses and no real data to support it. Bottom line is that it is a commodity that has no real regulation and people are getting rich off of it.



Grumpy said:


> You never struck me as one of the Occupy Wallstreet guys.



I'm not. I am just in favor of paying a fair price for a product. Not the over inflated price based on what some schmuck "thinks" it will be because some seagull crapped on a power wire 5 miles offshore next to an oil rig!


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## Gilligan

SG_Player1974 said:


> I would kindly point back to the facts that I stated in a previous thread....
> 
> !



"Kindly pointing" always includes a link. Thanks.


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## Gilligan

SG_Player1974 said:


> ... please don't even try to sell me the "demand has gone up" argument!



Just as soon as you show that you have even the slightest understanding of the current economics involved with the refining process....this might go somewhere. I know I sure as heck am glad I'm not invested in it in any way!


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## Gilligan

SG_Player1974 said:


> I am just in favor of paying a fair price for a product. !



So you will decide what is a fair price. I see.


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## SG_Player1974

http://www.thepeoplehistory.com/70yearsofpricechange.html

Hmmm... 

Average cost for gas at the pump 1980 = $1.19
Average cost for gas at the pump 2009 = $2.05
Average cost for gas at the pump 2013 = $3.80

You are right... nothing odd going on there! I guess the demand, costs of running refineries, whatever... went up that much in 5 years huh?

I guess the weather problems and Middle East wars have been much more of an impact in the last 5 years as opposed to the other 29!


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## Gilligan

SG_Player1974 said:


> [ costs of running refineries, whatever... went up that much in 5 years huh?
> 
> !



So then explain why so many have been shut down and the ones remaining are barely profitable. Because really stupid people got tired of making too much money?


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## itsbob

Tilted said:


> Even if we stick to closing prices (which narrows the range), the high to low difference is closer to 16 cents. That drop was over less than 3 weeks - not an earth shattering or even particularly unusual move, but still welcome relief from the run up that preceded it. And just for giggles, 16 cents per gallon at the gasoline pump would represent about $20 Billion per year for Americans.



Owe Malley will ensure he gets his share.. I'm thinking like around Nov 10th he'll be announcing all the new taxes, and toll hikes.. you know RIGHT after the election.  he's been talking about the gas tax hike now for awhile and with gas prices going down he'll ensure the prices won't go down for Marylanders.


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## SG_Player1974

Gilligan said:


> So then explain why so many have been shut down and the ones remaining are barely profitable. Because really stupid people got tired of making too much money?



Why do a lot of businesses lean towards hiring 2-3 part-time people to fill the positions of 1 full-time person?

Its cheaper to run 1 refinery at 120% production than to run 3 at 90% 

You get to save money on the costs of the other refineries (by not operating/closing them) AND... you get to reap the benefits of the price increases due to the pseudo-shortages in production!


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## Gilligan

SG_Player1974 said:


> Why do a lot of businesses lean towards hiring 2-3 part-time people to fill the positions of 1 full-time person?
> 
> Its cheaper to run 1 refinery at 120% production than to run 3 at 90%
> 
> You get to save money on the costs of the other refineries (by not operating/closing them) AND... you get to reap the benefits of the price increases due to the pseudo-shortages in production!



Problem with your incorrect theory is that the refineries in question are (or, in many cases, were) operated by multiple competing entities.  Yr just spitballing here.


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## SG_Player1974

Gilligan said:


> Problem with your incorrect theory is that the refineries in question are (or, in many cases, were) operated by multiple competing entities.  Yr just spitballing here.



What does the fact that they were competing have to do with them closing and/or not maintaining refineries? Your statement makes no sense in rebuttal to my argument.

Are you saying that these companies did NOT streamline the amount of production refineries and benefit from the profits of low output to drive higher prices/demand because they were competing?!

Sony and Microsoft compete too. Doesn't change the fact that they limit production on their latest Gizmo game so it drives up prices and revenue when they are released.

Bottom line is that numbers don't lie. There STILL has been no plausable explanation for why the price at the pump has increased so dramatically in such a short time!


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## Gilligan

SG_Player1974 said:


> What does the fact that they were competing have to do with them closing and/or not maintaining refineries? Your statement makes no sense in rebuttal to my argument.
> 
> !



Your previous supposition assumed either collusion (illegal) or an operational monopoly.  Neither is the case. You simply don't understand basic supply-demand economics. I guarantee you the companies that closed and/or divested themselves of refineries didn't do so to help their competitors or anyone else out. They did so for the most fundamental of reasons driving every business; it was not adequately profitable.

So, given that the refining business sucks rocks at current pricing levels, how, specifically, do you think they can significantly reduce what they sell it for and survive? I'm sure they'd love to hear from you. 

As you can easily see from the chart in the link..the "elephant in the room" is the cost of the oil. The rest of what adds up to the pump price is little bits and pieces...including refining costs.

http://energyalmanac.ca.gov/gasoline/margins/


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## Gilligan

SG_Player1974 said:


> If someone could explain to me why the price of gas at the pump increased a total of $1.20 in 25 years (mid-70's to 2000) yet... it has increased almost twice that amount in half the time. !



Hmm. A barrel of crude was selling for less than $30 on 9/11/2001....and only recently dropped back below $100 a barrel.  Lemme go grab a calculator and....


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## SG_Player1974

Gilligan said:


> Hmm. A barrel of crude was selling for less than $30 on 9/11/2001....and only recently dropped back below $100 a barrel.  Lemme go grab a calculator and....



Funny that the charts I am looking at say that the price of crude oil per barrel went down from $98 to about $58 between 2007 and 2009.

Also funny that I really do not remember any drastic decline in the price of gas at the pump during that 2 year period. 

http://www.wtrg.com/prices.htm

I guess we can chalk that up to those "special understandings about basic supply and demand" huh?


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## Gilligan

SG_Player1974 said:


> Funny that the charts I am looking at say that the price of crude oil per barrel went down from $98 to about $58 between 2007 and 2009.
> 
> Also funny that I really do not remember any drastic decline in the price of gas at the pump during that 2 year period.
> 
> http://www.wtrg.com/prices.htm
> 
> 
> I guess we can chalk that up to those "special understandings about basic supply and demand" huh?




I remember worrying gas was going to hit $5. 

Funny how many refineries closed after that period you refer too.   But you just go on and decide what's a fair price and just offer that. I'm sure someone will sell. 

On a related note..I just drove past three different stations on my way to Lex Park that  are posting under $3 bucks for regular now...


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## Gilligan

Holy crap!...

http://finance.yahoo.com/news/oil-prices-firm-weekly-us-inventories-114655471.html


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## SG_Player1974

Gilligan said:


> Funny how many refineries closed after that period you refer too.   But you just go on and decide what's a fair price and just offer that. I'm sure someone will sell.



I didn't say anything about AFTER. I want to know your reasoning for why the price of gas, at the pump, did NOT change or changed very, very little during that timeframe when the price of crude went down by 40%

Im not trying to get into a debate here... I would just like someone to explain it with facts and reasoning that makes sense instead of BS.


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## Gilligan

SG_Player1974 said:


> I didn't say anything about AFTER. I want to know your reasoning for why the price of gas, at the pump, did NOT change or changed very, very little during that timeframe when the price of crude went down by 40%
> 
> I'm not trying to get into a debate here... I would just like someone to explain it with facts and reasoning that makes sense instead of BS.



Because market activity could and did push it there. Why is that so hard to understand?  What are the root causes of unexpected fluctuations in soy beans..pork bellies....lithium....any fungible commodity, which refined petroleum products are. The market forces are global.  Most of the "players" in any market are always going to push prices up as much as they can....of course.

You are focused on a very short period of time; the refineries that are now closed required huge investments and took a long to build. I wonder how many of those would still be operating if they had been able to maintain the margins they could during the period you seem so fixated on.  Water under the bridge now; it's a good thing that demand for gasoline in the US has stopped rising so much in recent years.


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## SG_Player1974

Gilligan said:


> Because market activity could and did push it there. Why is that so hard to understand?  What are the root causes of unexpected fluctuations in soy beans..pork bellies....lithium....any fungible commodity, which refined petroleum products are. The market forces are global.  *Most of the "players" in any market are always going to push prices up as much as they can....of course.*
> 
> You are focused on a very short period of time; the refineries that are now closed required huge investments and took a long to build. I wonder how many of those would still be operating if they had been able to maintain the margins they could during the period you seem so fixated on.  Water under the bridge now; it's a good thing that demand for gasoline in the US has stopped rising so much in recent years.



I see your point however... this still does not answer my original question or maybe it does not provide enough of an answer.

How did the price of gas at the pump manage to almost double in price in 5-6 years when compared to the previous 30? Is your explanation that the "demand" went up this drastically and refineries went under at such a fast rate? So you are saying that the use of crude oil in our country AND countries all over the world had a 200% increase in usage in the last 5 years compared to the previous 30!?

I am focusing on such a short period (from my initial postings) because that is where the price differences are so drastic!

I believe the REAL reason for the pricing is what I highlighted above.... PERIOD!


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## Gilligan

SG_Player1974 said:


> I see your point however... this still does not answer my original question or maybe it does not provide enough of an answer.
> 
> How did the price of gas at the pump manage to almost double in price in 5-6 years when compared to the previous 30?!



You must have skipped over that post...  The price of a barrel of oil more than TRIPLED from where it was in 2001. In a separate link I provided, you can find that the oil cost is *by far *the primary constituent of the cost of a gallon of gasoline. Oil prices are established by the world market to an ever greater extent than gasoline prices are.   What part of that are you missing?


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## SG_Player1974

Gilligan said:


> You must have skipped over that post...  The price of a barrel of oil more than TRIPLED from where it was in 2001. In a separate link I provided, you can find that the oil cost is *by far *the primary constituent of the cost of a gallon of gasoline. Oil prices are established by the world market to an ever greater extent than gasoline prices are.   *What part of that are you missing*?



The part that explains WHY the price at the gas pump has nearly doubled since 2009... not 2001! So far you have mention refineries closing however, that did not cause the price to double in the past... not even close!

Could it simply be that the price has skyrocketed merely because of speculators?  Or, are you saying that the world market has seen demand increase almost 200% in the last half-decade?


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## Gilligan

LOL...compare the change to 2008 instead of 2009 then.  Barely changed..or down a bit actually...

http://www.GasBuddy.com/gb_retail_price_chart.aspx?city1=USA%20Average&city2=&city3=&crude=n&tme=120&units=us


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## SG_Player1974

Gilligan said:


> LOL...compare the change to 2008 instead of 2009 then.  Barely changed..or down a bit actually...
> 
> http://www.GasBuddy.com/gb_retail_price_chart.aspx?city1=USA%20Average&city2=&city3=&crude=n&tme=120&units=us





SG_Player1974 said:


> The part that explains WHY the price at the gas pump has nearly doubled since 2009... not 2001! So far you have mention refineries closing however, that did not cause the price to double in the past... not even close!
> 
> *Could it simply be that the price has skyrocketed merely because of speculators?  Or, are you saying that the world market has seen demand increase almost 200% in the last half-decade*?



I'll still patiently wait for your response to the question I asked.


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## Gilligan

SG_Player1974 said:


> I'll still patiently wait for your response to the question I asked.



You must be kidding.  I'll ignore your silly implication that prices are connected to demand in a simple linear and unity scale relationship; they most certainly are not.

OK..first, explain why the price of gasoline tumbled precipitously in the last quarter of 2008. Then explain why you are hopelessly fixated on "why" it then rose back to sustainable levels again...and keep insisting on comparing current prices to that anomalous low point at end of 2008 instead of the overall historical trends?

BTW..it all still goes back to oil prices. In July 2008, the price of a barrel of oil hovered near $150(!!). Only a few short months later, it had crashed to the remarkable low of only $43 per barrel - a decline of nearly 70%.  

So, the price of gasoline refined from $43/barrel oil bottomed out in 2009...and has steadily increased every since.  Now we're seeing the price of oil slide back again, but not from the kind of high it saw in 2008 and probably not to low it reached in early 2009.  My money is on a relatively long period of $2.60/gallon gasoline....


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## SG_Player1974

Gilligan said:


> You must be kidding.  OK..first, explain why the price of gasoline tumbled precipitously in the last quarter of 2008. Then explain why you are hopelessly fixated on "why" it then rose back to sustainable levels again...and keep insisting on comparing current prices to that anomalous low point at end of 2008 instead of the overall historical trends?



Ummm... I believe it was ME that posted a link to "historical trends" that showed the averages of gasoline at the pump for the last 40-50 years! I also pointed out that, according to that link, the price of gas at the pump had gone up almost 200% in the last 5 years.

YOU were the one whom singled out the years 2008 and 2009 in the post above.

For someone who constantly shames people about linking their proof and proving their argument.... you certainly have a short memory when someone does.


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## Gilligan

SG_Player1974 said:


> Ummm... I believe it was ME that posted a link to "historical trends" that showed the averages of gasoline at the pump for the last 40-50 years! I also pointed out that, according to that link, the price of gas at the pump had gone up almost 200% in the last 5 years.
> 
> YOU were the one whom singled out the years 2008 and 2009 in the post above.
> 
> For someone who constantly shames people about linking their proof and proving their argument.... you certainly have a short memory when someone does.



I figured anyone..including you...would never try to draw any meaningful conclusions from such an incredibly short-lived dip. Yet you just repeated it again..."200% in just 5 years". Fine..lets both be stupid. Using your unusual form of "two-point peak-trough" trend analysis...I maintain it's _dropped_ 15% in 6 years.

How do you explain that?


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## SG_Player1974

I think we went WAY off from the original topic.... Let me re-state my question. 

Gas prices are directly "reflected" apparently by the price of crude oil... which is a tradable commodity. So...

What is the root cause of said recent instability when compared to the previous decades? What are we currently pointing to to blame for it? Refineries? Wars? Demand? What???


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## Gilligan

Refineries have little of nothing to do with the price of anything..not the end product and not the raw product. They've squeezed about every dime of process efficiency they possibly can out of that.  (Look at the trend of the refining cost over time..as a percentage of total cost of a gallon of gas). 

 I've seen the rather dramatic gyration that occurred in 2008/2009 explained by a bunch of reasons by a bunch of pundits...but none of that matters as far as today's situation. Smooth the historical price plot to eliminate that aberration (the remarkable peak and trough both) and you have a relationship between oil prices and demand that pretty much makes sense otherwise. I see nothing in the recent drop in oil prices that is driven by anything other than supply versus demand (supply, in this case, factors in known reserves to some extent...and the extent of known reserves is reaching astronomical proportions.)


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## SG_Player1974

I just cannot grasp how a some-what regulated commodity can be allowed to fluxuate so much! How can the demand for such an essential product get so much lower, so fast as to cause such a dip in pricing? I would expect it to steadily and evenly go up as manufacturing and oil-based needs steadily increase but HOW does it turn on a dime like it did recently?


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## Gilligan

SG_Player1974 said:


> I just cannot grasp how a some-what regulated commodity can be allowed to fluxuate so much!



say...what??  "somewhat regulated"?  How is that?  How does this "allowing" you seem to think exist?  Who is it that does the "allowing"?  Why do you think prices fluctuate, sometimes dramatically, for _any_ commodity? Like soy beans.....wheat...metals....   

Ever look at a historical plot of the DJIA?


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## SG_Player1974

Yes... I see your point.


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## Gilligan

Lets just hope that the price of oil stabilizes, for a while, at a level that is "sustainable" and not so low that it induces too many production players to withdraw from the game. Then the price of gas will be somewhat more stable too...although the speculators will always push it around.  I personally can't see $45/barrel oil ever being sustainable. But $75-80 should be....

I have not ordered heating oil yet and my 500 gal tank is near empty.  I'm holding out, hoping to see the price fall a bit.  Really pisses me off that the price of off-road diesel is always so much lower than what I've been raped for #2 heating oil.


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## SG_Player1974

My question is Why wouldn't it be sustainable?

Its not like these are engine parts or flat screens! This is a product that EVERYONE needs for several reasons. IT WILL SELL and it will sell MORE at a lower price point. Its not like the public can say "I'm going to wait to fill my gas tank until the price per barrel goes down to $XX"

They are saying "I'm going to fill up my car tank, lawn mower tanks, RV tank, etc. because it is so cheap. So then... Why doesn't a lower price, which causes more consumption, provide for an equal or better profit margin?


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## LibertyBeacon

SG_Player1974 said:


> My question is Why wouldn't it be sustainable?
> 
> Its not like these are engine parts or flat screens! This is a product that EVERYONE needs for several reasons. IT WILL SELL and it will sell MORE at a lower price point. Its not like the public can say "I'm going to wait to fill my gas tank until the price per barrel goes down to $XX"
> 
> They are saying "I'm going to fill up my car tank, lawn mower tanks, RV tank, etc. because it is so cheap. So then... Why doesn't a lower price, which causes more consumption, provide for an equal or better profit margin?



Look at gasoline demand curves. Demand for gasoline tends to be inelastic, which does not support your assertion that people are filling all the things on falling retail prices. Generally, people don't consume less when prices rise, nor do they consume more solely because prices have fallen. There are exceptions that prove the rule and there are other factors at play, but in broad terms these are economic truisms in gasoline.

In general, prices are shifted as a result of changes in the _perception_ of the relationship between supply and demand. Just yesterday, for example, news coming out of the KSA said production was cut, and Libya is calling for OPEC-wide cuts. Crude markets here surged on the news. Not much has actually changed to the demand curve, yet crude has surged and if it sustains a bit, retail prices might rise a bit. Or at lest stop their current slide. It is all perception, based on this news.


----------



## SG_Player1974

LibertyBeacon said:


> In general, prices are shifted as a result of changes in the _perception_ of the relationship between supply and demand.
> 
> It is all perception, based on this news.



And this is the problem I have. Prices are not based on FACT. They are based on "perception."

Just like the old stories of the refineries in the gulf. I THINK the hurricane will damage them therefore the price will go up $.025/gallon.

The storm comes and goes.... nothing affected!

To quote Chris Rock... "If SH!T don't happen... Shouldn't I get my money back!?"


----------



## Gilligan

SG_Player1974 said:


> And this is the problem I have. Prices are not based on FACT. They are based on "perception."
> 
> Just like the old stories of the refineries in the gulf. I THINK the hurricane will damage them therefore the price will go up $.025/gallon.
> 
> The storm comes and goes.... nothing affected!
> 
> To quote Chris Rock... "If SH!T don't happen... Shouldn't I get my money back!?"



Hmm. What you describe almost sounds like....wait for it....standard commodity speculation.


----------



## SG_Player1974

And if there are no outside effects on the resource as the speculators predict... what happens to all the extra "profit" that is earned due to their incorrect predictions?

You might be happy paying the gypsies when they are wrong but... I am not! Im not saying it will probably EVER change as far too many people at the "top" make money from it but, just voicing my displeasure with it.


----------



## Gilligan

SG_Player1974 said:


> And if there are no outside effects on the resource as the speculators predict... what happens to all the extra "profit" that is earned due to their incorrect predictions?




It offsets the losses they take when they speculated in the wrong direction.    Business econ not your favorite subject, is it.


----------



## SG_Player1974

Gilligan said:


> It offsets the losses they take when they speculated in the wrong direction.    Business econ not your favorite subject, is it.



And when and how often does this happen specifically regarding oil? 

Also.. No.. I dont claim to know everthing about everything. That is why I propose questions on here... to gain arcane knowledge from those who DO know everything!


----------



## Gilligan

SG_Player1974 said:


> And when and how often does this happen specifically regarding oil?



All the time. Like it does with EVERY commodity ever traded anywhere.


----------



## SG_Player1974

Gilligan said:


> All the time. Like it does with EVERY commodity ever traded anywhere.



So.. are you saying that the public at large should brace themselves for the impending 5 year long downfall of prices at the pump? Ya' know... to make up for the 5 years of record profits made by all involved. 

Because... according to you... this happens "all the time" with "any commodity traded ever."


----------



## Gilligan

You really should go do some research in to commodity trading.

And read this....then go get mad at your government for being responsible for so much of what you pay for that gallon of gasoline...



> Industry profit margins are cyclical too. But on average, between 2006 and 2010, the largest oil companies averaged a profit margin of around 6.5%. This pales in comparison to profit margins in just about every other industry. The pharmaceutical industry, for example, routinely averages a profit margin of about 16%. The soft drink market is even more lucrative.
> 
> At the gas tank integrated oil companies make about 7 cents per gallon. Meanwhile, the government extracts more than 48 cents, on average, per gallon. That’s right: Uncle Sam takes nearly seven times more out of drivers’ wallets via taxation than “Big Oil.”



http://www.forbes.com/2011/05/10/oil-company-earnings.html


----------



## Gilligan

SG_Player1974 said:


> So.. are you saying that the public at large should brace themselves for the impending 5 year long downfall of prices at the pump? "



If you had bothered to read it...I said in an earlier post that I expected we might see a period of time where prices will hold right about where they are. Short attention span?...


----------



## SG_Player1974

Gilligan said:


> If you had bothered to read it...I said in an earlier post that I expected we might see a period of time where prices will hold right about where they are. Short attention span?...



No... apparently just inability of you to maintain your argument/reasoning.

There is a bit of a difference between the price at the pump increasing as it has over the last half decade AND it "holding still" at a far smaller decline in price.

Your contention is that there is an ebb and flow as with ALL commodities. Goes UP, goes DOWN, goes UP, goes DOWN. The question I posed was... When are we going to see some GOES DOWN to the tune of the same amount it has gone UP in the last 5 years?

Are we going to see it go down to 2009 prices? Further? I doubt it!


----------



## Gilligan

SG_Player1974 said:


> No... apparently just inability of you to maintain your argument/reasoning.
> 
> !



Do not confuse your inability to let go of your falsely conceived  narrative with your equal inability to understand how fungible commodities are traded internationally.   The next time the stock market collapses...or the housing market collapses..I'll be sure to ask you to explain why.


----------



## Gilligan

SG_Player1974 said:


> Are we going to see it go down to 2009 prices? Further? I doubt it!



I sure hope not!! To repeat that magnitude of a market anomaly would create nothing but havoc.


----------



## PeoplesElbow

SG_Player1974 said:


> No... apparently just inability of you to maintain your argument/reasoning.
> 
> There is a bit of a difference between the price at the pump increasing as it has over the last half decade AND it "holding still" at a far smaller decline in price.
> 
> Your contention is that there is an ebb and flow as with ALL commodities. Goes UP, goes DOWN, goes UP, goes DOWN. The question I posed was... When are we going to see some GOES DOWN to the tune of the same amount it has gone UP in the last 5 years?
> 
> Are we going to see it go down to 2009 prices? Further? I doubt it!



At one time Frankincense and Myrrh were very valuable and I'm sure people didn't see them being almost worthless in the future.


----------



## Gilligan

PeoplesElbow said:


> At one time Frankincense and Myrrh were very valuable and I'm sure people didn't see them being almost worthless in the future.



Inorite?  I put almost my entire portfolio in to Frankincense back when it was going up.  

I'm still holding out some hope for a rebound....


----------



## Gilligan

Some guessplanations in this article..worth a read.

http://www.bloomberg.com/news/2014-10-29/why-oil-prices-went-down-so-far-so-fast.html


----------



## MADPEBS1

so so so nice to see 93 Oct at 3.15 on tuesdays at Shell... Not been like that for a while...


----------



## stgislander

MADPEBS1 said:


> so so so nice to see 93 Oct at 3.15 on tuesdays at Shell... Not been like that for a while...



Wow that is cheap.  What was price of highway diesel?


----------



## Gilligan

oil still falling..

http://news.investors.com/Investing-Futures/111314-726409-Oil-Falls-To-74-A-4-Year-Low-OPEC-Stiffens.htm?ref=SThru


And some major companies are feeling the pain.....


http://petroglobalnews.com/2014/10/statoil-prepares-to-layoff-another-500-workers-as-total-cuts-approach-2000/


----------



## GURPS

$ 2.65 for a Gal of regular in Front Royal on Sat Nov 22


----------



## Tilted

OPEC has reportedly voted *not* to cut production. I have to admit that surprises me a bit, I doubted that the long-termers would be able to get enough short-termers (e.g. those that are feeling the pinch now and can't as easily cope with what they see as lost revenue) on board with that strategy. I'm not shocked by this decision, but I did think it was more likely that it would go the other way.

So... we could see a little more short-term downside in oil (and gas) prices. We'll likely pay for it in the long run, but it'll be nice for now and probably (on-net) help our economy grow a bit faster over the next couple of quarters. The effect on some of the smaller energy companies, those that have driven the new American oil boom over the last few years, won't be so great though.


----------



## Larry Gude

Tilted said:


> The effect on some of the smaller energy companies, those that have driven the new American oil boom over the last few years, won't be so great though.



That's a good point. Maybe that is the driving force behind this, to drive consolidation, reduce competition? Too Big To Fail gets out the scythe to do a little reaping?


----------



## Larry Gude

GURPS said:


> $ 2.65 for a Gal of regular in Front Royal on Sat Nov 22



Getting warmer. We need to be just under $2.00 for a couple years and then we can move on to addressing wiping out trillions in consumer and mortgage and school debt and THEN maybe we can recover.


----------



## kwillia

Larry Gude said:


> Getting warmer. We need to be just under $2.00 for a couple years and then we can move on to addressing wiping out trillions in consumer and mortgage and school debt and THEN maybe we can recover.



http://www.foxbusiness.com/industries/2014/12/01/happy-holidays-from-opec-will-gas-drop-to-2/

Holiday travelers are getting a nice gift this year with gasoline prices well below $3 a gallon in most states. Some drivers could pay even less than $2 this week after OPEC’s decision to stand still ignited a big selloff in oil.

GasBuddy.com is projecting that by the end of the week a gas station in Texas or South Carolina will be the first in the U.S. to drop its price for regular gas to $1.99 a gallon.

“Even a week ago, I would have said no way,” Patrick DeHaan, a senior petroleum analyst at GasBuddy, said when asked whether $2 gas comes as a surprise. “What a gift from OPEC. It’s the perfect time of year for this to happen.”


----------



## Larry Gude

kwillia said:


> Holiday travelers are getting a nice gift this year with gasoline prices well below $3 a gallon in most states. Some drivers could pay even less than $2 this week after OPEC’s decision to stand still ignited a big selloff in oil.




I've been saying it and I'll keep saying it; In order the us to recover, us being the middle class, oil has to be under $50 and debt needs to start being written off in exchange for higher interest rates. Consumer debt, credit cards, mortgages, THAT money instead of going to banks servicing dead wood, going to new purchases, new enterprise. 

It's all a matter of how better to spread it all around. Banks sitting on it, watching the big get bigger and the small disappear, or, a land of many small kings.


----------



## stgislander

Larry Gude said:


> I've been saying it and I'll keep saying it; In order the us to recover, us being the middle class, oil has to be under $50 and debt needs to start being written off in exchange for higher interest rates. Consumer debt, credit cards, mortgages, THAT money instead of going to banks servicing dead wood, going to new purchases, new enterprise.
> 
> It's all a matter of how better to spread it all around. Banks sitting on it, watching the big get bigger and the small disappear, or, a land of many small kings.



You've recommended this idea for a while now.  Has there ever been a serious analysis of such a proposal?


----------



## Gilligan

Larry Gude said:


> a land of many small kings.



But...tis good to be king.


----------



## Larry Gude

stgislander said:


> You've recommended this idea for a while now.  Has there ever been a serious analysis of such a proposal?



I've done several.    

It boils down to simple economics. If 'old' vendors' are getting most of the dough on products and services long since made and provided and really aren't making much on it, low interest rates, by definition, there are no new products and services going on. Worse yet, lending is strangled to only the people who don't need the money which simply causes consolidation as all sorts of venders needing capital collapse, more too big to fail, so that the bigger guys have more and more power to charge as they see fit once they feel enough power to do so. 

If you run a shop, you want to write off old debt, eat the loss, so that you can do new products and services because your customers and their cash are now freed up. So, use the government to, instead of supporting bank balance sheets, help banks write off poor debt, get new lending going and charge higher rates. Business has dough, customers have money to spend. Plus, you stop the programs that caused the mess, the GSE's and their low rates. Let banks take the risks and reap the rewards. 

It's a sort of Resolution Trust solution for the current mess; set it up, fix it, shut it down. That was the basis for the great Clinton economy. Bush 41 cleaned up the mess.


----------



## Larry Gude

Gilligan said:


> But...tis good to be king.



Tis good to be a GOOD king.


----------



## stgislander

Larry Gude said:


> I've done several.
> 
> It boils down to simple economics. If 'old' vendors' are getting most of the dough on products and services long since made and provided and really aren't making much on it, low interest rates, by definition, there are no new products and services going on. Worse yet, lending is strangled to only the people who don't need the money which simply causes consolidation as all sorts of venders needing capital collapse, more too big to fail, so that the bigger guys have more and more power to charge as they see fit once they feel enough power to do so.
> 
> If you run a shop, you want to write off old debt, eat the loss, so that you can do new products and services because your customers and their cash are now freed up. So, use the government to, instead of supporting bank balance sheets, help banks write off poor debt, get new lending going and charge higher rates. Business has dough, customers have money to spend. Plus, you stop the programs that caused the mess, the GSE's and their low rates. Let banks take the risks and reap the rewards.
> 
> It's a sort of Resolution Trust solution for the current mess; set it up, fix it, shut it down. That was the basis for the great Clinton economy. Bush 41 cleaned up the mess.



So besides you and then TJ telling you your idea is full of crap, no other serious analysis.  Hell, TJ's negative vote is enough for me... let's give it a shot.


----------



## Larry Gude

stgislander said:


> So besides you and then TJ telling you your idea is full of crap, no other serious analysis.  Hell, TJ's negative vote is enough for me... let's give it a shot.



And THAT is how great change is started!   

The problem we have goes back to Clinton and tax law changes where executives were no longer motivated by simple profit and loss and became motivated by stock prices. They are two VERY different concepts to drive an economy around. You can be losing money hand over fist but, showing huge growth, stock prices soars, you're bonus is 10-20 times, 100 times what you were ever gonna get paid by delivery products and services at profitable, competitive prices. And THAT is why TARP didn't fix the problem and why there is HUGE resistance to knocking all that 'value' off of balance sheets; at present, the honest profit to be earned is nothing compared to the riches to be reaped by stock prices. Figure that component out and we got us a ball game. The problem is that I start with the proposition that these people are going to have to accept giving up the HUGE payoffs for simply very good ones. 

That is gonna have a lot of resistance.


----------



## SG_Player1974

Ha... people think it is bad here!

Just got back from holiday travel to the Detroit area. They have a bit different set of rules about gas pricing/gouging up there. It is very common to see prices like $2.70/gal during the day. Once the clock hits around 4pm, those same prices would roll to $2.99/gal!

Sometime around 6-6:30pm the price was back down to $2.70. This was EVERY day I was there!

Apparently, in Michigan, they are allowed to change their prices as long as they do not go over the mandated "gouging" price change.


----------



## Gilligan

SG_Player1974 said:


> Just got back from holiday travel to the Detroit area. .



You need to find someone to talk to about your vacation choices. Just sayin'...


----------



## SG_Player1974

Gilligan said:


> You need to find someone to talk to about your vacation choices. Just sayin'...



Hey... no one gets a choice where they are born or where the rest of their family decides to live.... right?


----------



## Gilligan

SG_Player1974 said:


> Hey... no one gets a choice where they are born or where the rest of their family decides to live.... right?



Oh. Gotcha. I used to have family that lived in Gary, IN, so....


----------



## Gilligan

OK...some of this stuff is becoming a concern on a number of fronts.

http://www.telegraph.co.uk/finance/oilprices/11283875/Bank-of-America-sees-50-oil-as-Opec-dies.html

But seeing these azzhats complain about it does bring a smile...

http://news.yahoo.com/iran-fall-oil-prices-muslim-treachery-113608236--finance.html


----------



## MADPEBS1

2.89 right now for premium 93 Oct. at Shell, Gate 1 on Tuesday's with .20 off, NICE...


----------



## Larry Gude

$2.39 at Free State, cash, in Frederick yesterday, low grade


----------



## Gilligan

Saw 1.94 in Danville VA this past weekend.  But not to worry...President Empty Suit to the rescue...

http://ace.mu.nu/archives/354061.php


----------



## desertrat

Lowest price I've seen here was $1.86.


----------



## desertrat

$1.77 now


----------



## Larry Gude

desertrat said:


> $1.77 now



Hell, yeah!


----------



## Gilligan

I'm getting stoked now. Diesel is finally under 3...gas under 2...prices are almost back to where they were when we routinely hauled our rigs 12 and 14 hours each way to attend off-roading events up and down the east coast. Had to give that up when the cost of fuel got so high.


----------



## desertrat

Looked today and it was up 10 cents.


----------



## Gilligan

There is a down side to this fall in prices...and its shaping up to get real ugly too.


http://www.bloomberg.com/news/2015-01-22/oil-drillers-going-to-die-in-2q-on-crude-price-swoon.html


----------



## desertrat

Gilligan said:


> There is a down side to this fall in prices...and its shaping up to get real ugly too.
> 
> 
> http://www.bloomberg.com/news/2015-01-22/oil-drillers-going-to-die-in-2q-on-crude-price-swoon.html



Yep, big news here. Companies have stopped drilling on new wells. Soon will be layoffs.


----------



## GURPS

Wawa - Waldorf 228 & Western parkway

$ 1.99

Wawa - Waldorf 301 & Bilingsly

$ 1.94


----------



## desertrat

Saw $1.69 yesterday. New station trying to attract business.


----------



## SG_Player1974

GURPS said:


> Wawa - Waldorf 228 & Western parkway
> 
> $ 1.99
> 
> Wawa - Waldorf 301 & Bilingsly
> 
> $ 1.94



Yep. Apparently it costs another $0.20/gallon to get that same gas down here


----------



## Tilted

I hesitate to do this. The last time I suggested we were near a bottom (in oil) - albeit privately, not in public - I was off by a little. Like $45 or something.

But... though I have reservations about it... I think we've probably seen the near-term bottom in wholesale gas and are right now, or will very soon, see the near-term bottom in pump prices. I'd expect to see them start creeping back up over the next few weeks. Hopefully they don't climb much before finding a nice cozy range they remain happy to rest in for a while.


----------



## Tilted

desertrat said:


> Saw $1.69 yesterday. New station trying to attract business.



Cool!


----------



## kwillia

I paid $1.99 a gallon at BJs Wholesale in California, MD Saturday night.


----------



## Tilted

I just noticed that the price at the closest gas station to me is now $2.139, it was $2.079 (IIRC) a couple days ago. 

Heating oil (i.e. off-road diesel) at that station is also up to $2.519 from $2.449 (IIRC) last week.

RBOB gas (for March) is now up to about $1.55 after having hit a low of about $1.26 a couple weeks ago.

Oh, and WTI crude is back above $50 while Brent Crude is around $56.


----------



## Tilted

Anybody done the research on what's required to store a large amount of gasoline on one's property? I assume there are regulations about the tank and how it has to be set-up and what not.

And pricing, what kind of costs am I looking at to for, say, a thousand gallons of storage capacity?


----------



## desertrat

So with the price of gas down, why have retail prices not followed? Most everything is shipped by truck and rail.


----------



## Tilted

desertrat said:


> So with the price of gas down, why have retail prices not followed? Most everything is shipped by truck and rail.



A couple general reasons, though when it comes to particular things there can be particular reasons why prices go up or down (or don't go up or down).

For one, there can to some degree be a ratchet effect - once people get used to paying more for something, there's sometimes less need to bring its price down in response to decreasing input costs than there originally was to raise its price in response to increasing input costs. For another, sometimes it takes a while (especially in light of that ratchet effect) for decreasing costs to have an effect on prices.

That said, in December we did see a slightly negative change in the Core CPI (though it was small enough that, rounded to one decimal place as it gets reported, the change was 0.0 rather than a negative number). That measure is for everything other than food and energy. Including food and energy, we of course had price deflation for December and even November - food prices were up some in aggregate but energy prices in aggregate were down considerably.

Going forward I don't know that I'd expect much in the way of price deflation, other than with regard to particular things (e.g. beef), as the deflationary effect of lower transportation costs might be offset by price inflation that occurs for other reasons. Prices on the whole might be flatter, in other words, rather than necessarily move down.


----------



## GURPS

Tilted said:


> And pricing, what kind of costs am I looking at to for, say, a thousand gallons of storage capacity?





we had a tank at my previous job ..... 
concrete pad, grounded tank ... etc
i'll bet it is easier if you own a farm .....

if you are smart about it, and camouflage the tank, you might slide it in on the down low 
...... getting it refiled might be a problem

http://abovegroundfuelstoragetanks.com/


thanks to the EPA these are only good for water;

http://www.roverparts.com/Parts/GJC20



you could just purchase a surplus *M-35A1 with a fuel tank* [gasoline]


----------



## SG_Player1974

I see the price at the pump has gone up ~$0.20/gallon in the last week! 

Anyone care to speculate why??


----------



## desertrat

SG_Player1974 said:


> I see the price at the pump has gone up ~$0.20/gallon in the last week!
> 
> Anyone care to speculate why??



Nope but ours went up $.10 today also. Now $1.99.


----------



## LibertyBeacon

SG_Player1974 said:


> I see the price at the pump has gone up ~$0.20/gallon in the last week!
> 
> Anyone care to speculate why??



Crazy, right?

I mean I've had to ratchet back to domestic caviar and blended Scotch! Oh the horrors!


----------



## Gilligan

SG_Player1974 said:


> I see the price at the pump has gone up ~$0.20/gallon in the last week!
> 
> Anyone care to speculate why??



Because what goes down can - and will - also go back up?   The refinery workers strike is blamed for some of it.


----------



## SG_Player1974

Gilligan said:


> Because what goes down can - and will - also go back up?   The refinery workers strike is blamed for some of it.



I guess they needed something to blame it on huh?


----------



## Gilligan

SG_Player1974 said:


> I guess they needed something to blame it on huh?




You do not pay any attention to the stock market, obviously. Same thing. Heck, pork bellys were more volatile than oil for a while there.  "Markets" are all...all...about how perceptions and guesses factor in to pricing and trading.  "Is it going to go up?..and why...or down?..and why?"  The traders that deal with petroleum and derivatives have surely been wanting to "test for a bottom" for at least a month or more.  Frankly...I doubt they have found it yet. Can't blame 'em for trying though/


----------



## Tilted

SG_Player1974 said:


> I see the price at the pump has gone up ~$0.20/gallon in the last week!
> 
> Anyone care to speculate why??



I don't know that we need to speculate, the reasons are fairly straightforward. Sure, when we consider what might happen with oil and gas prices going forward we're going to be speculating a good deal. We don't know what is going to happen on various fronts and we surely don't know what the market is going to come to expect on those various fronts. But when we're talking about what has already happened, it's usually pretty easy to understand why it did (at least when it comes to significant moves or trends). Such is the nature of energy pricing markets, they behave fairly rationally based on the givens - at least more so than a lot of other marketable instruments' pricing markets do because, for one thing, energy markets are on a shorter clock so to speak for getting pricing correct than some of those other markets are (If it isn't clear what I mean by that, I'm happy to explain it and why it's the case). It's not knowing all those givens ahead of time that makes it difficult to further know what the markets will come to expect as to those givens and then how those markets will behave in response to those givens and their own expectations.

Anyway, to answer your question, pump prices have been going up over the last couple of weeks because wholesale gas prices have been going up for the last few weeks. To go a little further on gas prices in particular before turning to petroleum pricing in general, those wholesale gas prices turned around and started up shortly after total U.S. gasoline inventories flattened in what looks (for now) to represent a peak. For a couple of months U.S. gasoline stocks had been climbing steadily and rapidly, going from about 200 million barrels to about 240 million barrels. In other words, supply was exceeding demand by about 4 million barrels per week on average over that time. About a month ago those inventories stopped building and, as of the latest reported week, they're fairly flat - we didn't see a major increase over those weeks. Supply and demand have, perhaps, stabilized for the most part. (It is, of course, too soon to tell with the condition will hold.) So that's why gas prices have, it seems, bottomed for now. Have they bottomed for good or at least for a long while? I'm not entirely convinced, but I'd guess it's more likely than not that they have.

As for crude oil prices, which are up considerably over the last couple of weeks, and to put it simply - we're seeing more and more indication that the low prices are working, that is to say that future production expansion will be slowed by prices having gotten this low. Oil market pricing depends first and foremost on supply / demand balances - but, importantly, on speculation about supply / demand balances in the future, not necessarily actual current supply / demand balances. That's why, as markets can't know for sure what's going to happen in the future to affect supply / demand balances, oil pricing can be wrong at times (and almost always will be wrong to some small degree). But, for reasons I've referred to before, it can only be wrong by so much for so long before it has to correct. Previously it was (we realize now) wrong enough for long enough that a major correction was needed - the mis-pricing itself significantly affected supply / demand balances (which is why pricing can only be so wrong for so long). That's what we've been seeing and benefitting from over the last 6 months or so. But as has been said before, not only did pricing have to correct it had to overcorrect in order to suck up the significant excess supply that had been created by incorrect (i.e. too high) pricing. That's why oil prices have gotten as low as they have.

At some point though oil prices were going to find a bottom. And, at some point, they were going to start creeping back - the overcorrection could only last so long (unless we saw some other major changes / trends relating to oil production / consumption). Future supply expectations would decrease enough and/or future demand expectations would increase enough as a result of lower prices that higher oil prices would be called for based on those changed expectations. Now, for my own part, I'm not completely convinced we've seen the bottom for oil prices or that the bottom we have seen won't be retested. Only time will tell. But oil pricing markets have seen considerable evidence that lower prices are going to affect how much new oil production is added this year. New well permits have fallen considerably. Energy companies are announcing layoffs and revising rig (usage) projections downward. Rig counts (i.e. those currently being used) have been falling. Companies are announcing major reductions in their capital expenditures for this year - in other words, they aren't going to be spending nearly as much money trying to develop additional production because, at current crude prices, it doesn't make as much sense to spend that much money. BP last week added its name to the list of companies tightening their purse strings, and oil pricing responded immediately by moving upward.

Crude production 6 months from now will not be as much as it would have been 6 months from now had oil prices not fallen so drastically. There's little doubt about that now. (Though, to be clear again, we're only talking about a small portion of overall production - but that portion is what matters when it comes to pricing.) Is it enough? Are production loses going to be enough to justify oil prices going meaningfully higher? Who knows? But the point is, if you want to know why oil pricing (and gas pricing) has been moving back up of late, it is pretty simple: Pricing markets, at least at this moment, think supply will be cut enough and/or demand will be boosted enough to bring supply and demand back into balance (at higher prices). So, prices move higher. It isn't rocket science. Though we can't really know ahead of time when particular price movements are going to happen, we do understand what it is that will make them happen - the general cause, not necessarily the specific causes. And when they do happen, it isn't hard to identify the general cause (or often even the specific causes).


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## Tilted

Tilted said:


> I just noticed that the price at the closest gas station to me is now $2.139, it was $2.079 (IIRC) a couple days ago.
> 
> Heating oil (i.e. off-road diesel) at that station is also up to $2.519 from $2.449 (IIRC) last week.
> 
> ...



As of yesterday, the gas price was $2.199 and the OR diesel price was $2.539.


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## Tilted

Tilted said:


> I just noticed that the price at the closest gas station to me is now $2.139, it was $2.079 (IIRC) a couple days ago.
> 
> Heating oil (i.e. off-road diesel) at that station is also up to $2.519 from $2.449 (IIRC) last week.



Gas was $2.299 and OR diesel was $2.649 at the same station as of yesterday.


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## sockgirl77

Tilted said:


> Gas was $2.299 and OR diesel was $2.649 at the same station as of yesterday.



 It'll be over $3 per gallon by the end of the month.


Dammit.


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## Chasey_Lane

It's my fault gas prices are rising.  I bought a new vehicle 2 weeks ago.


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## stgislander

Chasey_Lane said:


> It's my fault gas prices are rising.  I bought a new vehicle 2 weeks ago.



Was is a big gas guzzling pickup truck?


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## Chasey_Lane

stgislander said:


> Was is a big gas guzzling pickup truck?


No, but it does have a bigger engine than my previous car.


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## stgislander

Ah Ha!!!  Guilty as charged.


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## Tilted

March contracts for RBOB gas are at about $1.63. That's not particularly noteworthy, they've been bouncing around there or a little below for a while - though that is about 35 cents above where the front month contract was about 5 weeks ago.

But I just noticed that April, May, and June contracts for RBOB are all above $1.80.

So... I suspect the pump price creep up isn't over yet.


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## Gilligan

I put 70 gallons of diesel in a truck yesterday....what a "bounce" the cost of that took!  More than 40 cents a gallon up from the lowest barely a month ago....  ;-(


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## cricketmd

SG_Player1974 said:


> I see the price at the pump has gone up ~$0.20/gallon in the last week!
> 
> Anyone care to speculate why??



Time of year for refinery maintenance which can limit fuel production.


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## Gilligan

According to this article, the ongoing strike by union refinery workers has had almost no actual impact on production.

http://maritimeglobalnews.com/news/refinery-strike-affects-onefifth-bgeea0


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## Tilted

I'm seeing three things in petroleum futures pricing that I'd make note of. We've seen these things before, they're not particularly bizarre or anything; but I'd say they tend to be bad signs when it comes to likely future oil and gas prices.

First, there's once again a big spread between WTI and Brent Oil. (The following represents an overly-simplified and not strictly-true characterization, but it might be somewhat helpful in understanding the significance of that spread: We might generally think of WTI as the U.S. oil price bellwether and Brent as the global oil price bellwether.) The front month-contract (April) for WTI is now at about $49 while the front-month contract for Brent is at about $61. That's quite a large spread.

Second, significant contango is developing in WTI pricing. The contract price 6 months out is about $8 higher than for the front month, and the price 12 months out is about $12 higher.

Third, RBOB gas contract pricing has dissociated to a degree from WTI contract pricing. It's more inline with Brent pricing than with WTI pricing right now. And it's up significantly over the last month while WTI pricing is up more modestly. The front month for RBOB is still March, and its price has risen quite a bit; but April's price is even higher, about 20 cents higher than March's at over $1.90.


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## Tilted

Tilted said:


> I just noticed that the price at the closest gas station to me is now $2.139, it was $2.079 (IIRC) a couple days ago.
> 
> Heating oil (i.e. off-road diesel) at that station is also up to $2.519 from $2.449 (IIRC) last week.



Now they're $2.499 (gas) and $2.799 (off-road).

There's a big disconnect between gas futures and oil futures right now. RBOB is at about $1.95 / gallon while WTI is at about $50 / barrel. Even Brent is only about $61 / barrel. Those barrel oil prices would typically be more in line with something like $1.60 gallon gas (RBOB) prices.


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## Tilted

WTI Oil is back down where it was in late January, a little above $44. But RBOB Gas remains significantly higher than it was at its recent bottom (from around the same time). So I still wouldn't expect pump prices to drop below their lowest levels from a month and a half ago, at least not soon.


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## Tilted

Well... WTI is now above $57 and Brent is about $65, and RBOB got back to the $2 level today. Long term I'd have expected prices to be rising - and, unless we're really wrong when it comes to increased production potential, I would still expect them to be higher a year and 3 years from now. But, given the continued supply glut we're seeing in U.S. regional markets, I wouldn't discount the possibility that we could see a quick (though temporary) decline in oil prices at some point. Here, in the U.S. in particular, we are running out of storage capacity. But we also have seen small overall production declines for the last 2 reported weeks, so perhaps stocks will soon reach their peak and we'll start to see some draw down. Who knows?

Anyway, best guess, I think we're gonna see the next step (back) up in pump prices over the next few weeks. Hopefully it isn't too big a step before prices stabilize, relatively speaking, again.


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## Salvador

I paid two bucks. I aint complainin


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## CRHS89

Normally prices at the pump have been much cheaper in LP than in leonardtown, but this week it was 2.49 in LP and 2.39 in Leoanrdtown.


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## desertrat

Started using E85 again. 1.99 instead of 2.39 for regular.


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## Tilted

This chart, however, isn't so pretty. According to Baker Hughes' data, the number of oil rigs operating in the U.S. has been more than cut in half over the last 6 months.


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## Tilted

Is WTI going to break $60 today? It's over $59, though down a tad this morning, and RBOB is around $2.03.

I'm starting to worry that the timing of this oil price decline is going to turn out to be an anti-Goldilocks scenario, so to speak, from a macroeconomic perspective. That is to say, it will be long enough to realize the negative effects on the economy - on economic growth and employment - but not long enough to realize the positive effects.

From most people's individual perspectives, any pump price relief is a good thing - at the least, it's more money they can save or use to pay down debt. But from a macroeconomic perspective, there are negative effects as well as positive effects. For now the negative effects seem larger. They likely represented a drag on GDP growth in this past quarter and there have been a number of layoffs in the oil industry and less economic activity with so many rigs being sidelined. It seems it might take a while for the positive effects, e.g. from people spending the extra money they have and creating new economic activity, to show up. If the price of oil goes back up too far too fast, the result may be that we got the negative without ever really getting the positive.


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## Tilted

It took a couple more days, but WTI broke above $60. It's almost at $62 now. Brent's at $69 and RBOB's at $2.09. That suggests that pump prices will climb a bit further.


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## stgislander

Tilted said:


> It took a couple more days, but WTI broke above $60. It's almost at $62 now. Brent's at $69 and RBOB's at $2.09. That suggests that pump prices will climb a bit further.



We've been hearing about the wells in the Gulf being temporarily shutdown due to the low prices.  Any guess what the price needs to be to spin those wells back into operation?


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## Tilted

stgislander said:


> We've been hearing about the wells in the Gulf being temporarily shutdown due to the low prices.  Any guess what the price needs to be to spin those wells back into operation?



I assume you're referring to drilling / new well development being halted? We're definitely seeing that now.

As for what it takes to get those projects going again, I'm sure it's different for different wells / areas / companies. So at $60 they'll be some wells being drilled a couple months from now that wouldn't have been at $50. And at $80 they'll be even more. At what point could we expect most of them to be back on track, as they would have been had we not seen the rapid price decline? Who knows, I'd guess in the $80 - $90 range. But I think it's more than just the barrel price. It's the expectation of price stability. I think even if tomorrow we saw prices go back to where they were 10 months ago (e.g. the high $90s for WTI), not all of the production growth that would have happened (had prices just remained there) will happen. Much of it would probably return fairly quickly, but I think some would not. The decisions that were affecting how many wells got drilled weren't just based on where the barrel price was on a given day, but on expectations that it was likely to stay around there or go higher. Oil prices had been fairly stable for a while, and conventional wisdom had demand more or less keeping up with supply such that a huge price decline wasn't expected by most - and traditionally OPEC could have been counted on to step in and halt a sharp price decline even if one happened.

The steep decline we saw put a hurt on some people, a lot of smaller energy companies - not the Exxons of the world but smaller players that were highly leveraged or otherwise couldn't afford the sustained cash flow hit from prices being cut in half for a while. They made decisions to allocate capital based on the assumption (or perceived high likelihood) that prices would be staying high for a while. Now they realize, because of a fresh real world demonstration, that they can be wrong in such regards. So they have to be gun shy to some extent. Regardless of where prices go from here, the overcorrection likely did some lasting damage when it comes to new production being developed in the coming years. That is at least what OPEC is counting on, and I tend to think they know this business fairly well.

Anyway, my best guess is that $80 - $90 barrel oil is probably the sweet spot for consumers. As much as cheaper is better for us, I think that's about as low as prices can be for a prolonged period while still sufficiently incentivizing enough effort to develop new production. But really, who knows? So many things could change that would affect that market.


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## Tilted

And we just got the weekly U.S. inventories number which unexpectedly showed a decline. Stockpiles have been (for the most part) building for a while and are near historically high levels. But maybe we've reached that inflection point where lower prices have affected actual current production (and consumption) enough such that the trend going forward will be for them to draw down.


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## Tilted

The Baker Hughes U.S. oil rig count increased for both of the last 2 reported weeks, the first of those was the first time it had increased since late last year. I wouldn't count on that being the beginning of a substantial upward trend - we'll likely remain well below where we were a year ago. But maybe it represents a bottom and stabilization in active U.S. oil rig counts and, with a little luck, we'll see an upward trend going forward. That wouldn't necessarily mean we'd reached that point in areas where new oil production is more expensive though, e.g. in the Bakken.


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## Tilted

Oil prices have been getting creamed for the last month or so. Even Brent closed below $50 yesterday. And wholesale gas has been moving along with, RBOB is down about 30 cents over the last month. The global oil market is still oversupplied and with the Iran nuke deal we might expect it to be easier for them to get even more oil to market. OPEC shows no signs of cutting production to support prices. They actually recently went the other way, increasing production to further suppress prices. Saudi Arabia alone reportedly boosted production by nearly a million barrels per day a few months ago.


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## kwillia

The founding partner of Again Capital made his call for $30 oil last month, but told CNBC's "Squawk Box" developments in China may have moved the timeline forward. He said he expects to see a 30 print by October, followed by a rebound that will put the cost of U.S. crude in the mid-$50s next year. 

"It's coming early. It's coming fast," he said, adding that oil in the $20s is possible, but that would be an overshoot to the downside. 

http://www.msn.com/en-us/money/markets/dollar30-oil-coming-sooner-than-you-think-kilduff/ar-BBlGdB5


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## Tilted

After falling to a 6+ year low last week and closing just above $38 last Monday, WTI Crude has seen a big move upward. It's up about 24% in just the last 3 trading days from Wednesday's close of $38.88 to a little above $48 right now. RBOB Gasoline has seen a similar move, up about 23 cents from its Wednesday close of $1.373.

EIA data tells us that U.S. production fell by more than 300K barrels per day between April and June.


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## Gilligan

Quite a bounce. I don't want to see oil go too low; I'm content with the cost of premium gasoline hovering around the $3 mark.


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## stgislander

Gilligan said:


> Quite a bounce. I don't want to see oil go too low; I'm content with the cost of premium gasoline hovering around the $3 mark.



I do like seeing highway diesel below $2.50/gal.


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## GURPS

did you every get your tank ?


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